Maybe I'm reading too much into it, but I don't think the deal was at all about maintaining good partner relations. I think it was more about trying to hold wages down in the valley. I realize that it was only a handful of companies, but those are the companies that literally everyone else looks to (for wage levels) and competes with for employees. It's quite possible that that agreement had very real effects on average salaries.
Exactly. These deals were not really Apple vs. Google. The real contest was managers vs. employees. In this case managers were cooperating to suppress the pay of engineers. Now without this collusion, engineers are free to extract greater rents for their services.
There is after all a strategic benefit to this; getting your talent for cheaper. Consequently a deal like this b/t direct competitors is harder to get off the ground. Also as an optimization problem, there are many different constraints that come into play at different parts of the curve. When you saturate the employment market with this behavior the market would likely seize up.
There are a lot of people (of varying degrees of foolishness[1]) who want to work at Google or Apple but wouldn't even consider the companies you listed.
[1]Prefer working at Google to Oracle? Fair enough. Rather work at Apple than Microsoft? Ha, have fun with that.
No. Those companies don't have a great reputation among tech people, but have a lot of good people working for them. Therefore they don't push prices up much, and are a great source of good candidates.
If that's the reasoning, why are FaceBook and Twitter not included? They have a good reputation among tech people, a bunch of engineers working for them, and (in FaceBook's case at least) they push salaries up a lot.
The particular companies involved make me think this really is about good partnership relations - until Android, Apple and Google had a really good relationship, Apple and Pixer share a head honcho, they all buy from Intel, Intuit's not really a competitor to any of them, etc. The effect, of course, is to drive down wages for the employees who would otherwise have been poached, and that's why the DoJ got involved. But I doubt that execs at each of those companies were telling themselves "We're going to drive down wages for our key employees" when they made the policy.
I believe that the companies in question would not have liked having a similar agreement with Facebook and Twitter. But it was not in the interest of Facebook or Twitter to agree to it. Therefore no meeting of the minds was possible.
I also believe that collusion was made much easier by the existing good relationships you refer to.
Where we may part ways is on what the execs were saying to themselves. I don't think it was just about maintaining good relations. I believe it was about reducing the cost of having to replace key institutional knowledge. It is worth skipping out on raw talent (that will need training) if it results in keeping key people.
Which brings us back to my point. Microsoft, Oracle and Yahoo do not have good reputations among tech people. So they are not major threats to losing institutional knowledge. And they are a great source of candidates. So it isn't in the interests of Apple, Google, etc to extend the agreement to those companies.
Kind of the same problem that kept it from happening with Facebook, but with the roles reversed.
I don't see how a company could have prevented an employee from leaving voluntary.
The article states that the company agreed not to use the most aggressive recruitment techniques (cold calling) on each other, which sounds like a gentlemen agreement more than collusion.
Google states that they recruited from Adobe, Intel, Apple, etc., that's pretty easy to verify.
They agreed not to actively compete for each other's employees.
In my simplistic (possibly wrong) view;
If you look at employment as a market place, and individual employees as different commodities, it keeps the market price of employees (specifically the extremely talented ones) artificially low. In the extreme it would be similar to price fixing. This is good for Larry and Sergei and Steve, but not good for the rest of us.
They shouldn't be making any agreements about hiring practices. (Gentlemen's or not).
I think your view is spot on. This was large companies engaging in collusion to artificially hold down wages in the labor market.
The article mentions that employees should know their worth, but doesn't mention how? The only way to know is to either actively seek a new job and get offers or be approached through cold calling. This ruling clearly helps the employee.
He said the practice would repress wages. Absolutely nothing about leaving voluntarily. It seems pretty reasonable that an agreement banning the most aggressive forms of recruitment would have some negative effect on employee compensation.
None of the companies involved in this ruling forced their employees to stay. They didn't stop them from getting a job at a competitor either. All the original agreement said was that the companies involved would not actively try to lure employees away from each other.
I think it's right to be strict on this given that the labor market is so asymmetrical even without anti-poaching collusion. Employers get detailed resumes, credit reports, references, and often salary history before hiring. Employees are expected to believe the company's marketing about being a great place to work, get no references, and the salaries of others at the company are kept secret. Hopefully sites like http://www.glassdoor.com can help to even out this imbalance.
Imagine these compianies controlled who offered you cars, or siding, or which schools your kids got invited to. Its not a decision they have the right to make for their employees - its paternal and selfish.
I know, its just cold calls, and smaller companies make these agreements (or just don't do it out of respect). But these are not small companies. They must behave differently.
"Imagine these compianies controlled who offered you cars, or siding, or which schools your kids got invited to. Its not a decision they have the right to make for their employees"
And so they don't. All these companies decided was that THEY don't aggressively try to recruit employees from certain other companies. They are not "controlling" anything. Their employees are free to apply wherever they want, including other companies that were part of the informal agreement, and those companies are free to hire them if they want.
I agree that recruiting employees from other companies isn't "stealing", and the argument that this agreement could artificially lower wages isn't unreasonable either. However, some people seem to be jumping to conclusions here. The agreement does NOT mean that someone cannot move from e.g. Google to Apple (etc), nor that Google would sue Apple if they did, nor that any of these companies "control" where their employees are going.
How often do people recruit through cold-calls anymore?
I was at one of the companies mentioned, and was contacted by a recruiter from another one of the companies menteioned, but they contacted me through linked-in, not through a cold-call.
Did the agreement really matter anymore with all the alternative ways of communicating?
(I ended up leaving where I was, but didn't go to the place that was recruiting me.)
Maybe I'm reading too much into it, but I don't think the deal was at all about maintaining good partner relations. I think it was more about trying to hold wages down in the valley. I realize that it was only a handful of companies, but those are the companies that literally everyone else looks to (for wage levels) and competes with for employees. It's quite possible that that agreement had very real effects on average salaries.